West Midlands businesses could fall foul of new law
West Midlands company directors could find themselves in the criminal courts from tomorrow (April 6) for failing to comply with a new law designed to eliminate the murkier side of British business.
Although the vast majority of company directors will have done nothing illegal, by failing to be specific about individuals who have control of company transactions, directors risk falling foul of the new law which could affect more than 300,000 businesses in the West Midlands.
The Small Business and Enterprise Act comes into effect in the same week that millions of confidential documents were leaked which show how Panamanian companies are being used to keep business transactions cloaked in secrecy.
The corporate law team at Wolverhampton law firm FBC Manby Bowdler say the leak had highlighted efforts being made in the UK to make British business more transparent. But it has also raised a red flag with company directors unaware of the effect of the new legislation coming into force tomorrow.
Corporate law expert David Preece said: “The reasons Panamanian companies are used by the rich and famous is the secrecy surrounding ownership of companies which Panama allows. Whereas the Small Business Enterprise and Employment Act will force any UK registered company to keep and make available a Register of Persons with Significant Control, disclosing the identities of the individuals who have a controlling influence on that company.
“We've been working with some clients already on this, but it has still caught many company directors unaware and we've seen an influx of calls since the reports on the leaks from Panamanian law firm Mossack Fonseca highlighted what the UK is doing to make business more transparent.
“The most significant change is that UK companies need to have a register of any individual who owns or controls more than 25% of the shares or the voting rights in that company, or who has the ability to exercise significant influence or control over a company.
“The penalties for failing to comply with the new Act are criminal sanctions on the directors personally, as well as fines for the directors and company. Although the vast majority will be involved in no wrong-doing whatsoever, they could still face criminal charges for failing to keep what is essentially a list.
“The effect of these changes will be to remove the cloak of anonymity from individuals who maintain complex business structures in order to hide their interest in UK companies and in doing so, hopefully bring to an end some of the negativity around business practice.
“But the measures required to achieve this can sometimes prove confusing and could easily fall down the list of priorities for busy company directors who may find themselves in front of the criminal courts.”
Follow this link to find out more about the Business and Company Law services offered by FBC Manby Bowdler.
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